Question 1

Does the existence of conglomerates make financial performance evaluation easier or more difficult? Why?

Accepted Answer

The answer of Does the existence of conglomerates make financial...

Question 2

The receivable turnover ratio is needed to calculate the

Accepted Answer

The receivable turnover ratio is used to calculate the number of times a company collects its accounts receivable in a given period. This information is then used to calculate the days' sales uncollected, which represents the number of days it takes to collect the outstanding accounts receivable. Therefore, the correct choice is A.

Question 3

The following selected amounts were extracted from the financial statements of Flamingo Corporation.
 $\begin{array}{lrrrr} 
& \text { Year 4 } & \text { Year 3 } & \text { Year 2 } & \text { Year 1 } \
\text { Net sales }& \$ 175,000 & \$ 170,000 & \$ 165,000 & \$ 150,000 \
\text { Cost of goods sold }  & 109,000 & 104,500 & 100,500 & 93,000 \
 \text { Gross margin }&66,000 & 65,500 & 64,500 & 57,000
\end{array}$
 Prepare a trend analysis for net sales,cost of goods sold,and gross margin.(Round answers to the nearest tenth of 1 percent.)Use Year 1 as the base year.

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The answer of The following selected amounts were extracted from...

Question 4

Using the income statement below,develop a common-size statement by filling in the blanks provided.Show your work.Round to one decimal place.
 $\begin{array}{lr}&20xx&20xx\
\text { Net sales } & \$ 200,000&\_\_\_ \
\text { Cost of goods sold } & 116,000&\_\_\_ \
\text { Gross margin } & \$ 84,000 &\_\_\_ \
\text { Operating expenses } & 46,000&\_\_\_ \
\text { Income before income taxes } & \$ 38,000&\_\_\_ \
\text { Income taxes expense } & 15,200&\_\_\_ \
\text { Net income }&\$22,800&\_\_\_ \
\end{array}$

Accepted Answer

The answer of Using the income statement below,develop a common-size...

Question 5

A high receivable turnover indicates that

Accepted Answer

A high receivable turnover indicates that customers are making payments very quickly, resulting in the quicker conversion of receivables into cash. This is a positive sign for the company's financial health as it helps improve cash flow and reduces the risk of bad debts. A high receivable turnover ratio also indicates efficient credit management by the company.

Question 6

The following information pertains to Jasmin Corporation.Assume that all balance sheet amounts represent both average and ending figures. Jasmin Corporation 
Partial Balance Sheet 
December $ 31,20 \mathrm{xx} $
$\begin{array}{lr}
\text { Liabilities and Stockholders' Equity }\
\text { Current liabilities } & \$ 60,000 \
\text { Long-term liabilities } & 90,000 \
\text { Stockholders' equity } & 150,000\
\text { Total liabilities and stockholders' equity }&\$300,000
\end{array}$ 
Jasmin Corporation 
Income Statement
 For the Year Ended December 31, 20xx
$\begin{array}{lr}
\text { Net sales } & \$ 80,000 \
\text { Cost of goods sold } & 45,000\
\text { Gross margin } & \$ 35,000 \
\text { Operating expenses } & 15,000\
\text { Income before income taxes } & \$ 20,000 \
\text { Income taxes expense } & 5,000\
\text { Net income }&\$15,000
\end{array}$ 
Jasmin Corporation had 6,000 shares of common stock issued and outstanding.The market price of Jasmin common stock on December 31,20xx,was $20.Jasmin paid dividends of $0.90 per share during 20xx.
What is the return on equity for this corporation? Round your answer to one decimal place.

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The answer of The following information pertains to Jasmin Corporation.Assume...

Question 7

Which of the following is a long-term solvency ratio?

Accepted Answer

The debt to equity ratio is a long-term solvency ratio that measures the proportion of debt financing as compared to equity financing in a company. It indicates the ability of the company to pay off its long-term debts using its equity. Return on equity and dividends yield are profitability ratios, while payables turnover is an efficiency ratio.

Question 8

A company that is leveraged is one that

Accepted Answer

A leveraged company has used debt financing to acquire assets or make investments. This means that the company has taken on financial risk in order to increase potential returns. It is important to note that leverage can be a double-edged sword, as it can also increase losses in the event of poor performance or market downturns.

Question 9

The following information pertains to Jasmin Corporation.Assume that all balance sheet amounts represent both average and ending figures. Jasmin Corporation 
Partial Balance Sheet 
December $ 31,20 \mathrm{xx} $
$\begin{array}{lr}
\text { Liabilities and Stockholders' Equity }\
\text { Current liabilities } & \$ 60,000 \
\text { Long-term liabilities } & 90,000 \
\text { Stockholders' equity } & 150,000\
\text { Total liabilities and stockholders' equity }&\$300,000
\end{array}$ 
Jasmin Corporation
Income St-atement
Far the Year Ended December 31, 20x
$\begin{array}{lr}
\text { Net sales } & \$ 80,000 \
\text { Cost of goods sold } & 45,000\
\text { Gross margin } & \$ 35,000 \
\text { Operating expenses } & 15,000\
\text { Income before income taxes } &\$20,000\
\text { Income taxes expense }&5,000\\text { Net income }&\$15,000
\end{array}$ 
Jasmin Corporation had 6,000 shares of common stock issued and outstanding.The market price of Jasmin common stock on December 31,20xx,was $22.50.Jasmin paid dividends of $0.90 per share during 20xx.
What is the price/earnings (P/E)ratio for this corporation? Round your answer to 2 decimal places.

Accepted Answer

The P/E ratio is calculated as the market price per share divided by the earnings per share (EPS). EPS is calculated as net income divided by the number of shares outstanding. Here, EPS = $15,000 / 6,000 = $2.50. The P/E ratio = $22.50 / $2.50 = 9.00 times.

Question 10

Days' payable is a measure of

Accepted Answer

Days' payable is a measure of a company's ability to meet its short-term financial obligations by indicating the number of days it takes the company to pay its suppliers for goods and services purchased on credit. This is a measure of liquidity, as it assesses the company's ability to meet its short-term obligations.

Question 11

The length of the operating cycle equals the days' sales uncollected plus the

Accepted Answer

The operating cycle is calculated as the sum of days' inventory on hand (the number of days it takes to sell inventory) and days' sales uncollected (the number of days it takes to collect payment from customers). The other options, days' payable and payables turnover, are related to the payment of bills to suppliers, not the collection of payment from customers. Receivable turnover is a measure of how quickly a company collects its accounts receivable.

Question 12

Which of the following is not a profitability ratio?

Accepted Answer

Quick ratio is a liquidity ratio, not a profitability ratio. The other options (A, B, and C) are all profitability ratios.

Question 13

The following information pertains to Jasmin Corporation.Assume that all balance sheet amounts represent both average and ending figures. 
Jasmin Carparation
Partial Ealance Sheet
December $31,20 x$
$\begin{array}{lr}
\text { Liabilities and Stockholders' Equity }\
\text { Current liabilities } & \$ 60,000 \
\text { Long-term liabilities } & 90,000 \
\text { Stockholders' equity } & 150,000\
\text { Total liabilities and stockholders' equity }&\$300,000
\end{array}$ 
Jasmin Corporation
Income St-atement
Far the Year Ended December 31, 20x
$\begin{array}{lr}
\text { Net sales } & \$ 80,000 \
\text { Cost of goods sold } & 45,000\
\text { Gross margin } & \$ 35,000 \
\text { Operating expenses } & 15,000\
\text { Income before income taxes } &\$20,000\
\text { Income taxes expense }&5,000\\text { Net income }&\$15,000
\end{array}$ 
Jasmin Corporation had 6,000 shares of common stock issued and outstanding.The market price of Jasmin common stock on December 31,20xx,was $20.Jasmin paid dividends of $1.25 per share during 20xx.
What is the dividends yield of this corporation? Round your answer to two decimal places.

Accepted Answer

The dividend yield is calculated by dividing the annual dividend per share by the market price per share. In this case, the annual dividend per share is $1.25 and the market price per share is $20. Therefore, the dividend yield is $1.25/$20 = 0.0625, or 6.25%.

Question 14

The following information pertains to Jasmin Corporation.Assume that all balance sheet amounts represent both average and ending figures. Jasmin Corporation 
Partial Balance Sheet 
December $ 31,20 \mathrm{xx} $
$\begin{array}{lr}
\text { Liabilities and Stockholders' Equity }\
\text { Current liabilities } & \$ 60,000 \
\text { Long-term liabilities } & 90,000 \
\text { Stockholders' equity } & 150,000\
\text { Total liabilities and stockholders' equity }&\$300,000
\end{array}$ 
Jasmin Corporation 
Income Statement
 For the Year Ended December 31, 20xx
$\begin{array}{lr}
\text { Net sales } & \$ 80,000 \
\text { Cost of goods sold } & 45,000\
\text { Gross margin } & \$ 35,000 \
\text { Operating expenses } & 15,000\
\text { Income before income taxes } & \$ 20,000 \
\text { Income taxes expense } & 5,000\
\text { Net income }&\$15,000
\end{array}$ 
Jasmin Corporation had 6,000 shares of common stock issued and outstanding.The market price of Jasmin common stock on December 31,20xx,was $20.Jasmin paid dividends of $0.90 per share during 20xx.
What is the return on assets for this corporation? Round your answer to one decimal place.

Accepted Answer

The answer of The following information pertains to Jasmin Corporation.Assume...

Question 15

Contrast the circumstances where horizontal analysis would be an effective analysis tool with those where common-sized analysis would be more useful.

Accepted Answer

The answer of Contrast the circumstances where horizontal analysis would...

Question 16

Cash flows to sales and cash flows to assets are measured in terms of

Accepted Answer

Cash flows to sales and cash flows to assets are measured as a percentage, typically represented as a ratio. This provides an indication of how efficiently a company is generating cash flow from its sales and assets. A higher percentage indicates better efficiency in generating cash flow.

Question 17

A company with $50,000 in current assets,$25,000 in quick assets,and $30,000 in current liabilities makes a payment of a $1,500 current debt.As a result of this transaction,the current ratio and quick ratio will

Accepted Answer

The answer of A company with $50,000 in current assets,$25,000...

Question 18

The following information pertains to Jasmin Corporation.Assume that all balance sheet amounts represent both average and ending figures. Jasmin Corporation 
Partial Balance Sheet 
December $ 31,20 \mathrm{xx} $
$\begin{array}{lr}
\text { Liabilities and Stockholders' Equity }\
\text { Current liabilities } & \$ 60,000 \
\text { Long-term liabilities } & 90,000 \
\text { Stockholders' equity } & 150,000\
\text { Total liabilities and stockholders' equity }&\$300,000
\end{array}$ 
Jasmin Corporation 
Income Statement
 For the Year Ended December 31, 20xx
$\begin{array}{lr}
\text { Net sales } & \$ 80,000 \
\text { Cost of goods sold } & 45,000\
\text { Gross margin } & \$ 35,000 \
\text { Operating expenses } & 15,000\
\text { Income before income taxes } & \$ 20,000 \
\text { Income taxes expense } & 5,000\
\text { Net income }&\$15,000
\end{array}$ 
Jasmin Corporation had 6,000 shares of common stock issued and outstanding.The market price of Jasmin common stock on December 31,20xx,was $20.Jasmin paid dividends of $0.90 per share during 20xx.
What is the debt to equity ratio for this corporation? Round your answer to one decimal place.

Accepted Answer

The debt to equity ratio is calculated as total liabilities divided by stockholders' equity. Total liabilities are $60,000 (current) + $90,000 (long-term) = $150,000. Stockholders' equity is $150,000. Therefore, the debt to equity ratio is $150,000 / $150,000 = 1.0 times.

Question 19

Lois Kent has owned and managed the operations of a small chain of sporting goods stores for the past two years.She has asked her administrative assistant to provide her with some annual reports of other companies that sell sporting goods as well as some published reports showing norms for the sporting goods industry so that Lois can compare the financial ratios of her company with those of other companies that sell sporting goods.Discuss the limitations of using comparisons with other companies and industry norms,which Lois needs to remember.

Accepted Answer

The answer of Lois Kent has owned and managed the...

Question 20

Eva Gomez is considering investing money in the common stock of Casa Corporation.She has obtained the annual report of the company and calculated the ratios presented in your text.Eva knows that her calculations are accurate,but does not know if the ratios indicate favorable or unfavorable things about the company.What three standards of comparison are available to Eva? What would each of the standards tell her about her ratios?

Accepted Answer

The answer of Eva Gomez is considering investing money in...

Quiz 28: Financial Analysis of Performance